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Facts
Financial creditors initiated Corporate Insolvency Resolution Process (CIRP) against Spentex Industries Ltd. under Section 7 of the IBC due to the assessee's failure to repay debt. The NCLT admitted the application and imposed a moratorium under Section 14(1) of the IBC, preventing continuation of proceedings against the assessee.
Held
The Income Tax Appellate Tribunal held that, in light of the NCLT-imposed moratorium, the present appeals cannot continue. Consequently, the appeals were dismissed in limine for statistical purposes. Liberty was granted to the parties to seek revival if the NCLT order is altered or if circumstances necessitate.
Key Issues
Can income tax appeals proceed against an assessee when a moratorium under the Insolvency and Bankruptcy Code, 2016 (IBC) has been imposed by the NCLT?
Sections Cited
Income Tax Act, 1961, Section 143(3), Insolvency and Bankruptcy Code, 2016, Section 7, Insolvency and Bankruptcy Code, 2016, Section 14(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “I” DELHI
Before: SHRI CHALLA NAGENDRA PRASAD & SHRI PRADIP KUMAR KEDIA
Sr. ITA/CO Nos. Appeal A.Y. Pr.CIT Order Assessment Remarks No. by dated Order dated 1. Assessee 2013-14 CIT(A)-31, New Assessment Assessment Order Delhi order dated order dated under section 18.05.2018 25.03.2016 143(3) of the Income Tax Act, 1961. 2 CO No.178/Del/2018 Assessee 2014-15 CIT(A)-44, New Assessment Assessment Order Delhi order dated order dated under section 27.04.2018 18.11.2016 143(3) of the Income Tax Act, 1961.
3. Revenue 2012-13 CIT(A)-17, New Assessment Assessment Order Delhi order dated order dated under section 26.07.2018 17.03.2015 143(3) of the Income Tax Act, 1961.
4. ITA No.5077/Del/2018 Revenue 2014-15 CIT(A)-44, New Assessment Assessment Order Delhi order dated order dated under section 27.04.2018 18.11.2016 143(3) of the Income Tax Act, 1961.
When the appeals were called for hearing, none appeared on behalf of the assessee despite notice. Even, there is no application seeking adjournment.
In view of the aforesaid, we proceed to dispose of the appeals ex-parte qua the assessee after hearing learned Departmental Representative and based on the materials available on record. It is observed, certain financial creditors of the assessee company filed application under section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the 3 ITAs No.4825, 6455, 5077/Del/2018 & CO No. 178/Del/2018 assessee before the National Company Law Tribunal (NCLT), since, the assessee had failed to repay the debt liability. Post filing of the present appeals, the NCLT principal bench, New Delhi, has passed an order on 03-01-2020 admitting the application of the financial creditors and initiating CIRP against the assessee. Further, upon admission of the application of the financial creditors, moratorium under section 14(1) of the IBC has been imposed. A copy of the aforesaid order of learned NCLT is available on record.
Thus, in view of the moratorium granted by NCLT, all proceedings in any court of law, Tribunal etc. cannot continue. That being the position in law, no useful purpose is going to be served in keeping the appeals pending. Therefore, in our view, these appeals need to be consigned to the records.
In view of the aforesaid, we dismiss these appeals in limine. However, liberty is granted to the parties to seek revival of the appeals, in case, order of NCLT is either reversed or modified by any higher judicial Authority or if there is any change in factual or legal position or if it is necessary to do so in the interest of the parties.